8 Annuity Questions You Should Ask Your Financial Advisor
Become an Annuity Pro
I’m confident about what I do. I'm America's annuity agent®; I know what I'm talking about. Today's topic is asking your financial advisor about annuities. You should be using me for an annuity; I’m America's annuity agent, licensed in all 50 states; I’m the top agent. I'm the thought leader; I’ve written seven books. I'm the guy.
For the advisors out there, Stan The Annuity Man® is knocking on the door and giving the questions to ask. You go into the marble building, the marble floors and the teak and all this stuff, you're sitting in front of the master of the universe advisor, that could be your brother-in-law, whoever it is. For whatever reason, suddenly, out of the blue, they went from money manager managing your assets to now they want to sell you an annuity. You got to be thinking that’s a red flag.
How many carriers, annuity companies, and life insurance companies offer annuities. How many carriers do they offer? I'm asking this, and the reason you need to ask this because I worked for Paine Webber, Morgan Stanley, UBS, and a lot of the big brokerage firms and banks. They have a limited amount of inventory for many carriers to be sold through those huge distribution networks. Think of it; they got to pay big money to get on the shelf. Think of it like Lays potato chips. You walk through the grocery store, and the Lays potato chips are eye level, Lays Sour Cream & Onion, BBQ. Yes. Then the best type of potato chips down here because they didn't pay the eye level. Do you have to ask them how many carriers do they represent? It better be a bunch because, remember, annuities are commodity products. You need to shop all carriers for the highest contractual guarantee.
“How many annuity types do you sell?" If they say, "Well, I just sell annuities." Wrong, done, you're out. There are many different types. There are Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, Multi-Year Guaranteed Annuities, Fixed Index Annuities, Variable Annuities; I can keep going. If they can't name all of those off, they're not an annuity expert; they’re selling annuities.
"Do you sell Qualifying Longevity Annuity Contracts?" They're probably going to say, "What's that?" Most agents advisors don't even know what a Qualified Longevity Annuity Contract is; that will flush them out because you do not want to buy an annuity from a person who doesn't know anything about annuities. Why would you do that? Let me go to the expert. You don't go to a general practitioner for heart surgery or hand surgery? No. Do you go to a heart specialist, hand specialist, annuity specialist, or expert?
"Do you provide a disclaimer before you buy?" That's a big one. Here's another one. Do you go on a scenic trip to Bora Bora with your boyfriend and or girlfriend and or wife and or husband, depending on what you're choosing, if you sell enough of this product? That's a good one. Another one, what's your commission? Understand with annuities; commissions are built into the product and hidden from the client. It's not a bad thing. You can ask, I'll tell you what it is, but commissions are just part of the overall administrative costs of an annuity. Light bill, water bill, commissions, but it's a net transaction. You put $100,000 in, you're going to see $100,000 on your statement, but ask them what the commission is. If they say, "Well, there are no commissions on this." Wrong answer. Of course, there's a commission. There are no philanthropists in the annuity business, period, end of the story. You need to ask those questions to that person.
"When you quote the annuity, will I see more than one carrier?" If they say the following, "No, because I've looked at all of these and think that this specific one is the best and the best from you." Wrong answer. That means they are either lazy, sociopath, or have no inventory and are just trying to sell what they have. Remember, you quote all carriers for the highest contractual guarantee for your specific situation. Answering two questions, what do you want the money to do contractually, and when do you want those contractual guarantees to start?
If they're pitching market-type returns, say, can you provide me the contractually guaranteed return? If they say no, the wrong answer. You buy an annuity for what it will do, not what it might do®. The will do® the contractually guaranteed part of the contract, period. That's what it is. That's what you buy it for. You ask those questions, ask them general questions.
As they are out of all of the six primary types and all the assets, you manage and or sell and recommend, what percentage do annuities represent? That's a good question. And if they say, "Well, 100 percent." They're not in the game. In my opinion, you have to specialize.
I'm Stan, The Annuity Man, because I’m all about annuities in that there are thousands of contracts and hundreds of carriers, and there's a lot of minutiae to the products you need to know about. That's the reason I've written seven books. If you're not choosing to use me in the buying process, your agent needs to back up their credibility on what they know about annuities. You have a wholesaler from the specific carrier, and they go office to office, so they have a meeting and blah, blah, blah. They tell the 30,000-foot view of how their specific annuities work for XYZ company. That's how most advisors are getting their information about annuities. If they're good friends with the wholesaler, they might sell out annuity because they like the wholesaler. There’s a demographic tidal wave, baby boomers retiring every day or reaching retirement age. It's like 10,000 a day. Many agents and advisors are trying to get ahead of that demographic tidal wave. They've gone from saying, I hate all annuities to saying, well, everyone's coming in.
My advice is we're getting into a silly season with annuity sales. Now that the banks and the brokerage firms in all of those people are starting to sell them, that doesn't mean you need to buy it from them. Just because the big name is on the front of the building doesn't mean that they're credible for selling annuities. Typically the firms don't like when agents sell annuities because they can't do a wrap fee; they can't do a management fee wrapped around many annuities.
This is one, if they do this, they completely disqualify themselves. If that agent or adviser says to you or RA, or whoever and says, "I want to sell you this Fixed Index Annuity,” which is a CD-type product that you can lock in gains one day per year. If they say to you, I'm going to put that in your wrap account, and I'm going to charge you an annual fee, management fee to manage your index annuity of which you can only change one day per year, then that is a nonstarter. That's crazy talk.
Now I know the industry Stan, you don't get it, you don't understand the newest, no, no, I do. What you're saying is you're going to charge a fee for 364 days that I can't do anything with it for that one day, I'm going to charge you a fee for the whole year. Think logically: when it comes to annuities, you buy them like plane tickets and shop all carriers for the highest contractual guarantee. We can do that for you. Do you want a second opinion if someone's pitching you? I’m a walking middle finger of annuity truth; I will give you a brutal and factual opinion. If it's a good one, I'll say, "Hey, the good recommendation, go with it." If they're pitching something that sounds too good to be true, it is.
Never forget to live in reality, not the dream®, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.